NHPC - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 3.2
| Stock Code | NHPC | Market Cap | 78,854 Cr. | Current Price | 78.5 ₹ | High / Low | 92.3 ₹ |
| Stock P/E | 24.9 | Book Value | 39.6 ₹ | Dividend Yield | 2.43 % | ROCE | 7.44 % |
| ROE | 8.40 % | Face Value | 10.0 ₹ | DMA 50 | 79.3 ₹ | DMA 200 | 81.8 ₹ |
| Chg in FII Hold | 0.34 % | Chg in DII Hold | -0.23 % | PAT Qtr | 926 Cr. | PAT Prev Qtr | 1,072 Cr. |
| RSI | 49.2 | MACD | -0.50 | Volume | 1,87,11,403 | Avg Vol 1Wk | 1,35,25,614 |
| Low price | 71.0 ₹ | High price | 92.3 ₹ | PEG Ratio | -6.90 | Debt to equity | 0.99 |
| 52w Index | 35.0 % | Qtr Profit Var | 3.06 % | EPS | 3.15 ₹ | Industry PE | 25.5 |
📊 Analysis: NHPC offers stability with a large market cap (78,854 Cr.) and a fair valuation (P/E 24.9 vs industry 25.5). Dividend yield at 2.43% provides steady income support. However, efficiency metrics are weak with ROE at 8.40% and ROCE at 7.44%, limiting long-term growth appeal. The PEG ratio (-6.90) highlights poor growth prospects relative to price. Debt-to-equity at 0.99 indicates moderate leverage. Technical indicators (RSI ~49.2, MACD negative) suggest neutral to weak momentum, with price hovering near both 50 DMA (79.3 ₹) and 200 DMA (81.8 ₹). Quarterly PAT has declined (1,072 Cr. → 926 Cr.), raising concerns about earnings consistency.
💰 Ideal Entry Zone: A favorable entry would be in the range of 72 ₹ – 76 ₹, closer to support levels and below current price, offering better margin of safety.
📈 Exit / Holding Strategy: If already holding, maintain a medium-term horizon (2–3 years) given stable dividend yield and fair valuations. Consider partial profit booking near 90–92 ₹ if momentum improves. Exit strategy should be considered if earnings continue to decline or if leverage increases. Long-term investors may continue holding for dividend income but should temper growth expectations.
✅ Positive
- Fair valuation with P/E (24.9) close to industry average (25.5).
- Dividend yield (2.43%) provides steady income support.
- Large market cap (78,854 Cr.) ensures scale and resilience.
- FII holding increased (+0.34%), showing foreign investor confidence.
⚠️ Limitation
- Low ROE (8.40%) and ROCE (7.44%) indicate weak efficiency.
- PEG ratio (-6.90) suggests poor growth prospects relative to price.
- Debt-to-equity ratio (0.99) indicates moderate leverage risk.
- Quarterly PAT decline raises earnings concerns.
📉 Company Negative News
- Quarterly PAT fell from 1,072 Cr. to 926 Cr.
- DII holding decreased (-0.23%), showing reduced domestic institutional support.
📈 Company Positive News
- Dividend yield at 2.43% is attractive compared to peers.
- FII inflows reflect confidence in long-term prospects.
- EPS at 3.15 ₹ provides steady earnings visibility.
🏭 Industry
- Industry P/E at 25.5 indicates sector is moderately valued.
- Power and energy sector expected to benefit from renewable energy expansion and government infrastructure push.
🔎 Conclusion
NHPC is a stable company with fair valuations and decent dividend yield, but weak efficiency metrics and limited growth prospects reduce its attractiveness for aggressive long-term investors. Ideal entry is below current price (~72–76 ₹). Existing holders should maintain positions with a 2–3 year horizon, booking profits near highs if valuations remain excessive. Long-term investors may hold for dividend income but should temper growth expectations.